TDS on Income from Pension:
In the case of pensioners who receive their pension from a
nationalized bank, the instructions contained in this circular shall
apply in the same manner as they apply to salary-income. The deductions
from the amount of pension under section 80C on account of contribution
to Life Insurance, Provident Fund, NSC etc., if the pensioner furnishes
the relevant details to the banks, may be allowed. Necessary
instructions in this regard were issued by the Reserve Bank of India to
the State Bank of India and other nationalized Banks vide RBI's Pension
Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS)
No.60/GA.64(11 CVL)-/92), dated the 27th April, 1992, and, these
instructions should be followed by all the branches of the Banks, which
have been entrusted with the task of payment of pensions. Further all
branches of the banks are bound u/s 203 to issue certificate of tax
deducted in Form 16 to the pensioners also vide CBDT circular no. 761,
dated 13-1-1998.
New Pension Scheme:
The New Pension Scheme(NPS) has become operational since
1st Jan. 2004 and is mandatory for all new recruits to the Central
Government Services from 1st January, 2004. Since then it has been
opened to employees of State Governments, Private Sector and Self
Employed. The income received by the NPS trust is exempt. The NPS trust
is exempted from the Dividend Distribution Tax and is also exempted from
the Securities Transaction Tax on all purchases and sales of equities
and derivatives. The NPS trust will also receive income without tax
deduction at source. The above amendments are retrospectively effective
from 1-4-2009 (AY 2009-10) onwards.
